United States withdrawal from Iran deal puts business worth R478bn at risk

Posted - May 10 201800:43

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United States withdrawal from Iran deal puts business worth R478bn at risk

Boeing Co. Chief Executive Officer Dennis Muilenburg downplayed the loss of jetliner sales to Iranian air carriers caused by President Donald Trump's decision to withdraw from the Iran nuclear deal.

The IranAir order included 15 Boeing 777-300ER long-range jets.

But as opposition to the Iran accord mounted in the U.S. Congress, which holds the key to defence and other contracts, and as markets for its jets improved elsewhere, Boeing seemed to change its tone with the comments by Muilenburg last month. It has not delivered any airplanes and never firmly booked the orders. "As we have throughout this process, we'll continue to follow the USA government's lead", Gordon Johndroe, a Boeing vice president, said in a statement.

At list prices, those are valued at just shy of $20billion.

Norway's Saga Energy signed a 2.5 billion euro ($3 billion) deal in October 2017 to build solar power plants in Iran.

Boeing is ahead with 221 net orders for 2018, and had delayed booking the orders from its $16.5 billion Iran contract - Iran's biggest with America since the 1979 revolution.

Even amid this easing, Washington continued to keep in place an embargo on American citizens operating in Iran and barred Iranian entities from using the USA financial system. "The plan that we outlined for you, the production rate that we've put in place, is not dependent on the Iranian orders".

Analysts - as reported by the Washington Post - believed that the impact on Boeing would be modest because of a backlog of orders for 737 aircraft.

USA sanctions will probably bar further deliveries of Airbus planes to Iran because all of the jets contain a significant amount of US parts. Licences for aircraft manufacturers Boeing and Airbus to sell jets to Iran will be revoked, US Secretary of Treasury Steven Mnuchin, said on Tuesday. The deals depend on U.S. licences because of the use of American parts in commercial aircraft.

In a statement Tuesday, Airbus spokeswoman Mary Anne Greczyn said the company is "carefully analyzing the President's announcement and will be evaluating next steps".

Mnuchin said it may be possible for some companies over the next three months to seek waivers from the sanctions or new licenses to do business with Iran, but he did not identify which companies.

While the Airbus deal is not necessarily totally dead, prospects for filling it are "not great", he said. He said companies doing business in Iran would not be able to generate new business but would be able to wrap up existing contracts.

Israel has traded blows with Iranian forces in Syria since February, stirring concern that major escalation could be looming.

Mattis, who once spoke publicly of the need to abide by the Iran nuclear deal, has since tempered his remarks and told Congress it was an "imperfect arms control agreement" that needed to be fixed.

A cancellation of Airbus's Iranian orders - which it booked early to pip Boeing in the 2016 order race - could wipe out its entire tally of 86 net orders for this year.

Industry sources say some of the larger airlines that have ordered the new model 777X are seeking deferrals of the initial deliveries.

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